Exhibit 10.28
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 18, 2000, by and
between VALOR TELECOMMUNICATIONS, LLC, a Delaware limited liability company (the
"Company"), and XXXXXXX X. XXXX (the "Employee").
WITNESSETH:
WHEREAS the Company desires to induce the Employee to enter
into employment with the Company for the period provided in this Agreement, and
the Employee is willing to accept such employment with the Company on a
full-time basis, all in accordance with the terms and conditions set forth
below;
NOW, THEREFORE, for and in consideration of the premises
hereof and the mutual covenants contained herein, the parties hereto hereby
covenant and agree as follows:
1. Employment.
(a) The Company hereby agrees to employ the Employee, and
the Employee hereby agrees to accept such employment with the Company,
commencing on January 31, 2000 (the "Commencement Date") and continuing for the
period set forth in Section 2 hereof, all upon the terms and conditions
hereinafter set forth.
(b) The Employee affirms and represents that as of the
commencement of his employment by the Company on the Commencement Date, he will
be under no obligation to any former employer or other party which is in any way
inconsistent with, or which imposes any restriction upon, the Employee's
acceptance of employment hereunder with the Company, the employment of the
Employee by the Company, or the Employee's undertakings under this Agreement.
2. Term of Employment.
(a) Unless earlier terminated as provided in this
Agreement, the term of the Employee's employment under this Agreement shall be
for a period beginning on the Commencement Date and ending on February 7, 2003
(the "Initial Term").
(b) The term of the Employee's employment under this
Agreement shall be automatically renewed for additional one-year terms (each a
"Renewal Term") upon the expiration of the Initial Term or any Renewal Term
unless the Company or the Employee delivers to the other, at least ninety (90)
days prior to the expiration of the Initial Term or the then current
Renewal Term, as the case may be, a written notice specifying that the term of
the Employee's employment will not be renewed at the end of the Initial Term or
such Renewal Term, as the case may be. The period from the Commencement Date
until February 7, 2003 or, in the event that the Employee's employment hereunder
is earlier terminated as provided herein or renewed as provided in this Section
2(b), such shorter or longer period, as the case may be, is hereinafter called
the "Employment Term".
3. Duties. The Employee shall be employed as President and
Chief Operating Officer of the Company, shall faithfully perform and discharge
such duties as inhere in the position of President and Chief Operating Officer
of the Company and as may be specified in the Limited Liability Company
Agreement of the Company with respect to such position, and shall also perform
and discharge such other duties and responsibilities consistent with such
position as the Board of Directors of the Company (the "Board of Directors")
shall from time to time determine. The Employee shall report to the Chief
Executive Officer of the Company. The Employee shall perform his duties
principally at offices of the Company in Dallas, Texas, with such travel to such
other locations from time to time as the Chief Executive Officer may reasonably
prescribe. Except as may otherwise be approved in advance by the Board of
Directors, and except during vacation periods and reasonable periods of absence
due to sickness, personal injury or other disability, the Employee shall devote
his full business time throughout the Employment Term to the services required
of him hereunder. The Employee shall render his business services exclusively to
the Company and its subsidiaries during the Employment Term and shall use his
best efforts, judgment and energy to improve and advance the business and
interests of the Company and its subsidiaries in a manner consistent with the
duties of his position. Notwithstanding the foregoing, the Employee shall be
entitled to participate as a director or advisor to one or more associations,
businesses or community or charitable organizations in the Dallas/Ft. Worth
area, so long as such activity does not (i) involve a substantial amount of the
Employee's time, (ii) impair in any material respect the Employee's ability to
perform his duties under this Agreement or (iii) violate the provisions of
Section 9 of this Agreement.
4. Salary, Bonus and Signing Bonus.
(a) Salary. As compensation for the performance by the
Employee of the services to be performed by the Employee hereunder during the
Employment Term, the Company shall pay the Employee a base salary at the annual
rate of Four Hundred Fifty Thousand Dollars ($450,000) (said amount, together
with any increases thereto as may be determined from time to time no less
frequently than annually by the Board of Directors in its sole discretion, being
hereinafter referred to as "Salary"). Any Salary payable hereunder shall be paid
in regular intervals in accordance with the Company's payroll practices from
time to time in effect.
(b) Bonus. The Employee shall be eligible to receive
bonus compensation from the Company in respect of each fiscal year (or portion
thereof) occurring during the
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Employment Term in an amount targeted at 100% of his Salary in accordance with
the Company's management bonus plan as in effect from time to time (pro rated
for any portion of a fiscal year occurring during the Employment Term, excluding
the first year of the term), in each case as may be determined by the Board of
Directors in its sole discretion on the basis of performance-based criteria
consistent with the Company's business plan to be established by the Board of
Directors in its sole discretion and disclosed to the Employee prior to the
commencement of each fiscal year of the Company. In any event, the Employee
shall be entitled to receive a bonus of not less than $250,000 in respect of the
fiscal year ending December 31, 2000 (pro rated as aforesaid if the Employment
Term ends prior to December 31, 2000).
(c) Signing Bonus. In connection with the execution and
delivery by the Employee of this Agreement and in consideration of certain
compensation that the Employee will not receive from his prior employer as a
result of the commencement of the Employee's employment by the Company
hereunder, the Company shall pay the Employee a one-time bonus in an amount
equal to $500,000 no more than forty-five days after the Commencement Date.
5. Other Benefits; Equity Interests.
(a) General. During the Employment Term, the Employee
shall:
(i) be eligible to participate at a level commensurate
with his position in any employee equity purchase plans or programs
that may be adopted for the benefit of the Company's officers or
employees generally and in any employee fringe or other employee
benefits and pension and/or profit sharing plans that may be provided
by the Company for its senior executive employees in accordance with
the provisions of any such plans, as the same may be in effect from
time to time;
(ii) be eligible to participate in any medical and health
plans and other employee welfare benefit plans that may be provided by
the Company for its senior executive employees in accordance with the
provisions of any such plans, as the same may be in effect from time to
time;
(iii) be entitled to the number of paid vacation days in
each calendar year determined by the Company from time to time for its
senior executive officers, provided that such number of paid vacation
days in each calendar year shall not be less than twenty (20) work days
(four calendar weeks); the Employee shall also be entitled to all paid
holidays given by the Company to its senior executive officers;
(iv) be entitled to sick leave, sick pay and disability
benefits in accordance with any Company policy that may be applicable
to senior executive employees from time to time; and
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(v) be entitled to reimbursement for all reasonable and
necessary out-of-pocket business expenses incurred by the Employee in
the performance of his duties hereunder in accordance with the
Company's normal policies from time to time in effect.
The Company will obtain for the benefit of the Employee (i) term life insurance
coverage providing $1,800,000 in death benefits to beneficiaries designated by
the Employee and (ii) long-term disability insurance coverage providing the
Employee with long-term disability benefits equal to 60% of his Salary payable
on and after the 181st day of the Employee's qualifying disability, provided,
however, that (x) annual premiums for the insurance coverage described in (i)
and (ii) above cannot exceed $25,000 and (y) the foregoing assumes the
insurability of the Employee. The Company and the Employee agree that the
Employee's existing life and disability insurance policies may, if permitted to
be carried over to the Company, wholly or partially satisfy the Company's
obligations under this paragraph (subject nevertheless to clause (x) above). In
the event that the annual premiums for the insurance coverage described in (i)
and (ii) above would exceed $25,000, then either (A) the coverage will be
reduced to the extent necessary to keep the annual premiums under $25,000 or (B)
the Employee shall pay the amount of such excess.
(b) Options. In connection with the execution and
delivery of this Agreement by the Employee, the Company is granting to the
Employee options to purchase 1,600,000 Class B Common Interests of Valor
Telecommunications Southwest, LLC, which Class B Common Interests shall vest (i)
as to 20% of the Class B Common Interests on the Commencement Date and (ii) as
to an additional 20%of the Class B Common Interests on each of the first,
second, third and fourth anniversaries of the Commencement Date on which the
Employee continues to be employed on a full time basis by the Company. The
option agreement setting forth the terms of the options shall provide for
accelerated vesting under the following conditions:
(1) in the event that an Acceleration Event (as
hereinafter defined) occurs prior to the first anniversary of the
Commencement Date, then an additional 30% of the options shall vest
(for a total of 50% vested options); and
(2) in the event that an Acceleration Event (as
hereinafter defined) occurs on or after the first anniversary of the
Commencement Date, then 100% of the options shall vest.
For purposes of this Agreement and the options, "Acceleration Event" means the
termination of the Employee's employment by the Company pursuant to clause (iv)
of Section 7(a) below or by the Employee pursuant to clause (v) of said Section
7(a).
(c) Purchase of Interests by Employee. In connection with
his employment by the Company, the Company is granting the Employee the right
and option, but not the obligation, to purchase Class A Common Interests and
Preferred Interests in the Company having an aggregate purchase price of
$2,000,000 on the same basis as the institutional investors in the Company's
equity prior to the date hereof.
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(d) Relocation Expenses. The Company shall pay for the
reasonable and necessary expenses incurred by the Employee in relocating his
principal residence to the vicinity of the Company's executive offices in
Dallas, Texas, and reasonable living expenses incurred by the Employee during
the six-month period beginning on the Commencement Date, to include apartment
rental, cleaning and laundry expenses, provided that the total of all such
payments made under this Section 5(d) shall not exceed $50,000 in the aggregate.
6. Confidential Information. The Employee hereby covenants,
agrees and acknowledges as follows:
(a) The Employee has and will have access to and will
participate in the development of or be acquainted with confidential or
proprietary information and trade secrets related to the business of
the Company and any present or future subsidiaries or affiliates of the
Company (collectively with the Company, the "Companies"), including but
not limited to (i) customer lists; related records and compilations of
information; the identity, lists or descriptions of any new customers,
referral sources or organizations; financial statements; cost reports
or other financial information; contract proposals or bidding
information; business plans; training and operations methods and
manuals; personnel records; software programs; reports and
correspondence; and management systems, policies or procedures,
including related forms and manuals; (ii) information pertaining to
future developments such as future marketing or acquisition plans or
ideas, and potential new business locations and (iii) all other
tangible and intangible property, which are used in the business and
operations of the Companies but not made public. The information and
trade secrets relating to the business of the Companies described
hereinabove in this paragraph (a) are hereinafter referred to
collectively as the "Confidential Information", provided that the term
Confidential Information shall not include any information (x) that is
or becomes generally publicly available (other than as a result of
violation of this Agreement by the Employee), (y) that the Employee
receives on a nonconfidential basis from a source (other than the
Companies or their representatives) that is not known by him to be
bound by an obligation of secrecy or confidentiality to any of the
Companies or (z) that was in the possession of the Employee prior to
disclosure by the Companies.
(b) The Employee shall not disclose, use or make known
for his or another's benefit any Confidential Information or use such
Confidential Information in any way except as is in the best interests
of the Companies in the performance of the Employee's duties under this
Agreement. The Employee may disclose Confidential Information when
required by a third party and applicable law or judicial process, but
only after providing immediate notice to the Company of any third
party's request for such information, which notice shall include the
Employee's intent to disclose any Confidential Information with respect
to such request.
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(c) The Employee acknowledges and agrees that a remedy at
law for any breach or threatened breach of the provisions of this
Section 6 would be inadequate and, therefore, agrees that the Companies
shall be entitled to seek injunctive relief in addition to any other
available rights and remedies in case of any such breach or threatened
breach by the Employee; provided, however, that nothing contained
herein shall be construed as prohibiting the Companies from pursuing
any other rights and remedies available for any such breach or
threatened breach.
(d) The Employee agrees that upon termination of his
employment with the Company for any reason, the Employee shall
forthwith return to the Company all Confidential Information in
whatever form maintained (including, without limitation, computer discs
and other electronic media).
(e) The obligations of the Employee under this Section 6
shall, except as otherwise provided herein, survive the termination of
the Employment Term and the expiration or termination of this
Agreement.
(f) Without limiting the generality of Section 10 hereof,
the Employee hereby expressly agrees that the foregoing provisions of
this Section 6 shall be binding upon the Employee's heirs, successors
and legal representatives.
7. Termination.
(a) The Employee's employment hereunder shall be
terminated upon the occurrence of any of the following:
(i) death of the Employee;
(ii) the Employee's inability to perform his duties on
account of disability or incapacity for a period of one hundred eighty
(180) or more days, whether or not consecutive, within any period of
twelve (12) consecutive months;
(iii) the Company giving written notice, at any time, to
the Employee that the Employee's employment is being terminated "for
cause" (as defined below);
(iv) the Company giving written notice, at any time
(including, without limitation, following a change of control of the
Company or a sale of substantially all of the assets of the Company),
to the Employee that the Employee's employment is being terminated or
is not being renewed, other than pursuant to clause (i), (ii) or (iii)
above;
(v) the Employee terminates his employment hereunder for
"Good Reason" (as defined below); or
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(vi) the Employee terminates his employment hereunder for
any reason whatsoever (whether by reason of retirement, resignation,
notice of non-renewal or otherwise), other than for "Good Reason".
The following actions, failures and events by or affecting the
Employee shall constitute "cause" for termination within the meaning of clause
(iii) above: (A) gross negligence by the Employee in the performance of, or
willful disregard by the Employee of, his obligations under this Agreement that
results in material damage to the business of one or more of the Companies, (B)
willful failure by the Employee to obey the reasonable and lawful orders and
policies of the Board of Directors that are consistent with the provisions of
this Agreement (in the case of clause (A) and this clause (B), which gross
negligence, willful disregard or willful failure (and the consequences thereof)
continue unremedied for a period of fifteen (15) days after written notice
thereof to the Employee) or (C) conviction of a crime (or entry of a plea of no
contest with respect thereto) that results in material damage to the business of
one or more of the Companies. For purposes of this Agreement, "Good Reason"
means (1) any material breach by the Company of its obligations under this
Agreement or (2) any substantial diminution of the Employee's responsibilities
as an officer of the Company, as set forth in this Agreement and the Company's
Limited Liability Company Agreement, and in each such case, such breach or
diminution shall continue unremedied for a period of fifteen (15) days after
written notice thereof to the Company.
(b) In the event that the Employee's employment is
terminated by the Company pursuant to clause (iv) of Section 7(a) above or by
the Employee pursuant to clause (v) of said Section 7(a), whether during the
Initial Term or during any Renewal Term pursuant to Section 2(b) above, then (i)
the Company shall pay to the Employee, as severance pay or liquidated damages or
both, monthly payments at the rate per annum of his Salary at the time of such
termination for a period of twelve (12) months after such termination plus, with
respect to such fiscal year if the Company's plan for such fiscal year is
achieved, a pro rata portion of any bonus payable with respect to such fiscal
year (such pro rata bonus to be payable within thirty days after the close of
such fiscal year) and (ii) the Company shall continue to provide the Employee
with life insurance and medical and health insurance coverage at levels
comparable to those in effect prior to such termination for a period from the
date of such termination to the earlier to occur of (x) the date which is twelve
(12) months after such termination and (y) the date upon which the Employee
becomes eligible to be covered for such benefits through his employment with
another employer at no greater cost to the Employee.
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(c) Notwithstanding anything to the contrary expressed or
implied herein, except as required by applicable law and except as set forth or
described in Section 7(b) above, the Company (and its affiliates) shall not be
obligated to make any payments to the Employee or on his behalf of whatever kind
or nature by reason of the Employee's cessation of employment (including,
without limitation, by reason of termination of the Employee's employment by the
Company for "cause"), other than (i) such amounts, if any, of his Salary as
shall have accrued and remained unpaid as of the date of said cessation and (ii)
such other amounts, if any, which may be then otherwise payable to the Employee
pursuant to the terms of the Company's benefits plans or pursuant to clause (v)
of Section 5(a) above.
(d) No interest shall accrue on or be paid with respect
to any portion of any payments hereunder.
8. Non-Assignability.
(a) Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee or his beneficiaries or legal
representatives without the Company's prior written consent; provided, however,
that nothing in this Section 8(a) shall preclude the Employee from designating a
beneficiary to receive any benefit payable hereunder upon his death or
incapacity. This Agreement may not be assigned by the Company except with the
Employee's prior written consent, provided, however, that the Company may assign
this Agreement to an affiliate of the Company with the financial resources to
fulfill the Company's obligations hereunder.
(b) Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or to assignment by operation
of law, and any attempt, voluntary or involuntary, to effect any such action
shall be null, void and of no effect.
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9. Restrictive Covenants.
(a) Competition. During the Employment Term and, in the
event the Employee's employment is terminated (i) by the Company pursuant to
clause (iii) or (iv) of Section 7(a) above or (ii) by the Employee as provided
in clause (vi) of said Section 7(a), during the twelve (12) month period
following such termination, the Employee will not directly or indirectly (as a
director, officer, executive employee, manager, consultant, independent
contractor, advisor or otherwise) engage in competition with, or own any
interest in, perform any services for, participate in or be connected with any
business or organization which engages in competition with any of the Companies
within the meaning of Section 9(d), provided, however, that the provisions of
this Section 9(a) shall not be deemed to prohibit (A) the Employee's ownership
of not more than two percent (2%) of the total shares of all classes of stock
outstanding of any publicly held company, or ownership, whether through direct
or indirect stock holdings or otherwise, of not more than one percent (1%) of
any other business or (B) any of the current activities permitted by the last
sentence of Section 3.
(b) Non-Solicitation. During the Employment Term and
during the eighteen (18) month period following the end of the Employment Term
for any reason whatsoever (or, if later, eighteen (18) month period following
termination of the Employee's employment with the Company), the Employee will
not directly or indirectly induce or attempt to induce any employee of any of
the Companies to leave the employ of the Company or such subsidiary or
affiliate, or in any way interfere with the relationship between any of the
Companies and any employee thereof.
(c) Non-Interference. During the Employment Term and, in
the event the Employee's employment is terminated (x) by the Company pursuant to
clause (iii) or (iv) of Section 7(a) above or (y) by the Employee as provided in
clause (vi) of said Section 7(a), during the twelve (12) month period following
such termination, the Employee will not directly or indirectly hire, engage,
send any work to, place orders with, or in any manner be associated with any
supplier, contractor, subcontractor or other business relation of any of the
Companies if such action by him would have an adverse effect on the business,
assets or financial condition of any of the Companies, or materially interfere
with the relationship between any such person or entity and any of the
Companies.
(d) Certain Definitions.
(i) For purposes of this Section 9, a person or entity
(including, without limitation, the Employee) shall be deemed to be a
competitor of one or more of the Companies, or a person or entity
(including, without limitation, the Employee) shall be deemed to be
engaging in competition with one or more of the Companies, if such
person or entity conducts, or, to the knowledge of the Employee, plans
to conduct, the Specified Business (as hereinafter defined) as a
significant portion of its business in any of the local
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telephone exchange markets served by the Companies or, in the case of a
person or entity pursuing a business strategy of consolidating local
telephone exchange properties, anywhere in the continental United
States. For purposes of this Agreement, "Specified Business" means (A)
providing local telephone service or engaging in a business conducted
by the Company at the time of termination of the Employee's employment
with the Company or (B) conducting, operating, carrying out or engaging
in the business of managing any entity described in clause (A).
(ii) For purposes of this Section 9, no corporation or
entity that may be deemed to be an affiliate of the Companies solely by
reason of its being controlled by, or under common control with, Welsh,
Carson, Xxxxxxxx & Xxxxx VIII, L.P. or any of its affiliates other than
the Companies, will be deemed to be an affiliate of the Companies.
(e) Certain Representations of the Employee. In
connection with the foregoing provisions of this Section 9, the Employee
represents that his experience, capabilities and circumstances are such that
such provisions will not prevent him from earning a livelihood. The Employee
further agrees that the limitations set forth in this Section 9 (including,
without limitation, time and territorial limitations) are reasonable and
properly required for the adequate protection of the current and future
businesses of the Companies. It is understood and agreed that the covenants made
by the Employee in this Section 9 (and in Section 6 hereof) shall survive the
expiration or termination of this Agreement.
(f) Injunctive Relief. The Employee acknowledges and
agrees that a remedy at law for any breach or threatened breach of the
provisions of Section 9 hereof would be inadequate and, therefore, agrees that
the Company and any of its subsidiaries or affiliates shall be entitled to seek
injunctive relief in addition to any other available rights and remedies in
cases of any such breach or threatened breach; provided, however, that nothing
contained herein shall be construed as prohibiting the Company or any of its
affiliates from pursuing any other rights and remedies available for any such
breach or threatened breach.
10 Binding Effect. Without limiting or diminishing the effect
of Section 8 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11 Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and (i) delivered personally,
(ii) mailed by certified or registered mail, return receipt requested and
postage prepaid, (iii) sent via a nationally recognized overnight courier or
(iv) sent via facsimile confirmed in writing to the recipient, if to the Company
at the Company's principal place of business, and if to the Employee, at his
home address most recently filed with the Company, or to such other address or
addresses as either party shall have designated in writing to the other party
hereto, provided, however, that any notice sent by certified or registered mail
shall be deemed delivered on the date of delivery as evidenced by the return
receipt.
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12 Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
13 Severability. The Employee agrees that in the event that
any court of competent jurisdiction shall finally hold that any provision of
Section 6 or 9 hereof is void or constitutes an unreasonable restriction against
the Employee, the provisions of such Section 6 or 9 shall not be rendered void
but shall apply with respect to such extent as such court may judicially
determine constitutes a reasonable restriction under the circumstances. If any
part of this Agreement other than Section 6 or 9 is held by a court of competent
jurisdiction to be invalid, illegible or incapable of being enforced in whole or
in part by reason of any rule of law or public policy, such part shall be deemed
to be severed from the remainder of this Agreement for the purpose only of the
particular legal proceedings in question and all other covenants and provisions
of this Agreement shall in every other respect continue in full force and effect
and no covenant or provision shall be deemed dependent upon any other covenant
or provision.
14 Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions hereof shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
15 Entire Agreement; Modifications. This Agreement constitutes
the entire and final expression of the agreement of the parties with respect to
the subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
16 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have duly
executed and delivered this Agreement as of the day and year first above
written.
VALOR TELECOMMUNICATIONS, LLC
By:
Name: /s/ Xxxxxxx X. Xxxx
-------------------------
Title: Chief Executive Officer
------------------------------
Xxxxxxx X. Xxxx
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